Category: Policy & Business

Covid Scheme Changes

Furlough Scheme

The Government has announced changes to the Covid furlough scheme (officially called the Coronavirus Job Retention Scheme – CJRS).  From the 1st July it will be possible to bring furloughed workers back on a part-time basis.  It will be possible to claim a CJRS grant for the normal hours not worked.

The scheme will close to new entrants from 30th June.  This means that employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30th June – i.e. the final date by which an employer can furlough an employee for the first time will be 10th June.

The Government contribution to the CJRS will gradually taper down over the next few months;

  • June and July: The Government will pay 80% of wages up to a cap of £2,500.
  • August: The government will pay 80% of wages up to a cap of £2,500, but employers will become responsible for paying National Insurance and pension contributions (claimed to be 5% of employment costs for the average worker)
  • September:  The Government will pay 70% of wages up to a cap of £2,187.50.  Employers will pay 10% of wages (plus NI and pension contributions) to make up 80% of an employees wages, up to a cap of £2,500.
  • October:  The Government will pay 60% of wages up to a cap of £1,875.  Employers will contribute 20% plus NI and pension costs.

For more details see – https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

Self-Employed Scheme

There has also been an update on the Self-Employment Income Support Scheme (SEISS).

  • A second (and final) round of funding will be made available in August.  The grant will be worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.  For example, the first round might cover losses during March, April and May of this year, with the second round covering June, July and August. 
  • It will still be possible to apply to the first round of the SEISS until 13th July.  This provides eligible individuals with a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.
  • The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by Covid-19 in the later phase.

Further guidance on the second grant will be published on Friday 12th June.  For details see – https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Agri Food Prospects after Covid

At one point in May, a toilet roll was worth more than a barrel of crude oil and the Bank of England sold gilts with a negative yield to willing buyers (which has never happened before).  We have all lived through several decades this year already!  As the lockdown begins to ease, this article looks at some of the longer-term effects of the outbreak on the agri-food sector.

Waste and the Environment

In the short term it appears from The Grocer and other sources that food waste in the house has fallen by as much as a quarter.  In the case of dairy, this may be more than the total decrease in consumption, suggesting the decline in demand could be just because we are being more careful with food.  It is an expensive improvement for the food and farming industry, but waste reduction is a good thing; a considerable achievement whilst the country spends two months thinking more carefully about food.  The same is apparently true for other sectors such as bread.  Whether this will last remains to be seen (we have our doubts).  With open-air markets reopening this month, other elements of the food chain are starting reappear and ease the supply through the supermarkets.  Incidentally, the reduction of waste has been seen in other non-food sectors too and of course consumption is down of many resources.  It would be an environmental boon if society could learn at least a few small lessons from lock-down of constraining unnecessary consumption.

Economics

The economic downturn will be the longest lasting part of the pandemic, currently underestimated by the stock market.  Agriculture and food supply will be affected (albeit less than some non-essential industry sectors).  But economic issues including currency, trade facilitation, tax and capital will have a greater and more lasting impact on food supply than the possible shortening of supply chains and introduction of robotics that some have suggested.  Businesses will be expected to share the burden of paying for what has happened, and that includes many farmers and rural entrepreneurs.  However, in times of recession it is good to be part of an industry that supplies a commodity that is necessary and its consumption doesn’t change substantially depending on wealth.  Agriculture does relatively well in recessions.

Around a third of the economy was closed down, with a view to reopening parts of it gradually at Government’s choosing.  Farming carried on.  Government protection schemes cannot last for ever and when they end, we can insolvencies and business failures.  The Financial Crisis of 2007-08 caused a 5% fall in GDP and it took 5 years to return to 2007 economic levels.  This March alone saw our economy shrink by that much.  The Spanish Flu in 1918-19 led to a 27% reduction in world GDP.  The Office of Budgetary Responsibility predicts a record 35% reduction in GDP for the second quarter of 2020, a 300-year record.  We will also inevitably have to start paying for the extraordinary debt the nation has incurred since January, certainly the highest since the last World War.  There are four ways of clearing debt; Default, Economic Growth, Taxation, and Inflation;

Default: No country will opt willingly to default on its debt as it is good for nobody.

Growth: Rapid growth will help get people back into work.  It will require softer business regulations and free market encouragement.  For instance, brewers currently require licences to deliver beer to consumers rather than pubs which prevented many from operating in March and April.  Small business flexibility is required.  Growth of the manufacturing sector will support greater employment and will also build the secondary service sector.  Farming could help here.  Sterling might prove too strong and fall in value here to encourage trade and exports.  Farming would benefit from a weaker Pound.

Taxation: Tax increases on the ‘haves’ are inevitable.  Farmers are generally in this cohort, by assets at least.  Those with income may bear the brunt of higher taxes but also those with property, or other assets could face a larger tax burden – i.e. changes in capital taxes.

Inflation: The only winner from inflation is the borrower.  It erodes debt as fast as assets.  This will not help the landowner, but the farmer, as manufacturer of commodities is owning one of the most inflation-proof assets.  A weak currency, massive quantitative easing and record low Base Rates (especially when oil prices rise) are inflationary.  High unemployment, reduced consumption and spare economic capacity are deflationary.

Adam Smith pointed out that capital in business flows in two directions, to labour or the owners.  Government is looking after the worker, but will not support the capitalists; they will lose value in their shares when the dividends are cancelled or profits fall. Those with capital will suffer from inflation when it goes up and will pay more in tax. If the day of the capitalist is toughening, perhaps the day of the entrepreneur is about to dawn. Free trade is the best way to re-establish supply chains that are not so fragile.  Government policy will presumably refocus on the big economic issues for a while. The farming budget has probably travelled far enough not to have to turn back.  But will HS2 survive?

Trade

An upsurge of protectionism is presumably inevitable.  It was already happening with the US, Chinese spat.  But more locally, irrational protective actions are taking place defending food supplies in a local store for locals only.  We should remember that, whilst it is good to provide business to local firms, becoming self-sufficient would in fact lower our food security.  The optimal food security needs to be calculated and the market allowed to achieve it and trade should be embraced.  Many supply chains will look to reduce the linkages.  Whilst for many it might mean buying more UK food, for others, buying from a single supplier from far away is a smaller supply chain than lots of smaller local suppliers. Economics will retain a key role and relationships too, that is what builds an economy

Opportunities

Innovative people have been using lockdown time being thoughtful and creative.  Many more patents have been registered than usual since January.  This might be because there is time on people’s hands, possibly because the world has suddenly changed, and new ideas are required.  Change creates threats, and opportunity.   Very big parts of the economy were already in the process of radical transformation, and this epidemic will accelerate this.

The world will endeavour to recover whilst undergoing the transition to non-fossil fuels.  This is one of the big issues of the 2020’s.  The virus has helped; whilst in lockdown, fossil fuels have accounted for less than 15% of electricity generation.

Brexit Update

Aside from details of the UK’s new Global Tariff regime published on 19th May (click here for article), there have been other notable recent developments in the Brexit negotiations.  These relate to the publication of the UK Government’s draft legal text for a UK-EU Comprehensive  Free-Trade Agreement (CFTA) and its proposals to implement the Northern Ireland (NI)-Ireland (IRL) Protocol.

Draft UK-EU Comprehensive Free Trade Agreement (CFTA)

This draft legal text was published on 19th May and forms a key part of the UK’s approach to the future relationship with the EU.  It elaborates on the objectives of the ‘Canada-style’ trading relationship which the Government set-out in February.  David Frost (UK’s Chief Negotiator) has insisted that the proposals approximate very closely what the EU has already agreed with Canada and Japan.

However, the EU is insisting that to get the kind of deal which the UK is seeking, it needs to agree to ‘level playing-field’ provisions designed to stop the UK from undercutting the EU’s rules on State Aid, tax, labour and environmental regulation.  According to trade experts, the UK’s ambitions in areas such as the mutual recognition of qualifications (e.g. lawyers) goes beyond what is contained in other FTAs, including Canada and Japan.  It is seen by Brussels as an attempt to ‘cherry-pick’ aspects of its current access to the Single Market, and the EU is unlikely to offer concessions on this without some commitments to its level playing-field requirements.

Other areas of friction relate to the EU’s demands for access to the UK’s fishing waters, Britain’s objections to any role for the European Court of Justice in overseeing any eventual deal and arrangements for the implementation of the NI-IRL Protocol (see below).

The draft legal text (292 pages) contains limited (six) references to agriculture and these primarily refer to the WTO Agreement on Agriculture. The legal text is accessible via; https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/886010/DRAFT_UK-EU_Comprehensive_Free_Trade_Agreement.pdf

Whilst it is useful to get sight of the UK’s proposed legal text, this should be very much seen as a negotiating position.  The situation is likely to evolve significantly as discussions progress with the EU in the coming weeks.

NI-IRL Protocol

On 20th May, the UK Government set-out its proposed approach on implementing NI-IRL Protocol.  A core focus of this document is on protecting Northern Ireland’s place within the UK Customs Territory and to minimise the scope for friction on GB-NI trade. It plans to do this by;

  1.  Unfettered access on trade going from NI to GB: meaning that trade should continue as it does now, with no additional processes, paperwork or restrictions on such trade. The EU is unlikely to have problems with this as it is an internal UK matter. However, one area where there may be a potential issues is the EU foresees NI businesses having to implement its Customs Code and, as a result, exit summary declarations would be required on shipments leaving NI to the rest of the UK or other non-EU countries. 
  2.  Trade going from GB to NI: no tariffs will be levied on such trade if the goods remain within the UK Customs Territory (i.e. stays in NI).  Only goods ultimately entering Ireland or the Rest of the EU, or have a high risk of doing so would face tariffs.  Here, the EU takes a very different view and sees all goods entering into NI from GB as ‘at risk’ of moving South.  It believes that where goods have tariff differentials between the UK and the EU, there is a significant risk of smuggling.  It is clear that this will be one of the main areas of contention when it comes to discussions within the Joint Committee that will oversee the implementation of the Protocol.
  3.  No new customs infrastructure in Northern Ireland: whilst acknowledging that there would be some additional processes and documentation for goods, particularly agri-food, arriving into NI, these would be ‘de-dramatised’ as much as possible and no new physical customs infrastructure would be built.  That said, there would be some expansion of additional entry points for agri-food goods to provide for proportionate controls.  This will be another issue to watch, but the UK Government’s proposals appear to give it some wriggle-room to expand existing infrastructure to manage arrangements.  There are still many challenges here concerning agri-food as these will be the most arduous controls to manage, but the UK has made some progress in recruiting additional veterinarians for example. 
  4. Northern Ireland benefits from UK trade deals with third countries: sets out the ambition for NI businesses to benefit from lower tariffs associated with any such deals, just as GB businesses would. What NI businesses can eventually avail of will also be contingent on the specific arrangements that third countries who strike FTAs with the UK are comfortable with.

Another point to note is that the UK appears to be placing a greater emphasis on using the Joint Committee to oversee the implementation of the NI-IRL Protocol as a negotiating forum, whereas the EU sees it as a body to implement what has already been negotiated.  The issues above will no doubt be opened up for debate at the Joint Committee’s next meeting in early June.  Further detail on the UK’s approach is available via: https://www.gov.uk/government/publications/the-uks-approach-to-the-northern-ireland-protocol

Overall, there is a sense that momentum is building ahead of the next European Council (18-19th June) which will have a key role in any decision to extend the Transition Period beyond December 2020 (decision is due by 30th June), or to provide an alternative ‘fudge’ which extends the negotiating period until October possibly.  Whilst the UK is adamant that it will not extend the Transition beyond 31st December, influential voices are calling for an extended implementation period of 6-9 months beyond June 2020.  They claim that this would allow businesses to make the legal changes necessary to implement what has been agreed during the negotiating phase (taking place during the transition).  Whether all of this can be agreed and implemented within an additional 6-9 months remains a tall order, but any additional time would be welcomed by most businesses currently having to grapple with the Covid crisis.

EU Farm Strategies

The EU has published two strategies that are likely to have a  long-term effect on its farming industry.  The ‘Farm to Fork’ (F2F) and Biodiversity Strategies are core elements of the European Green Deal and set out the EU’s long-term goals and direction of travel for the agri-food sector for the next 10 years.  In the F2F Action Plan, the EU’s Executive has pledged to cut the overall use of chemical pesticides and the use of more hazardous pesticides by 50% by 2030.  It is also committed to reduce nutrient losses by 50%, ensuring there is no deterioration in soil fertility whilst reducing the use of fertilisers by at least 20% by the end of the decade.  Pledges also include the reduction of EU sales of anti-microbials for farmed animals and fish by 50% by 2030 and to halve the food waste per person at both retail and consumer level over the same timeline.  Furthermore, an Action Plan for Organic Farming is due to be published later this year, with the goal of reaching 25% of the EU’s agriculture land being farmed organically by 2030.  Acknowledging the current Covid-19 pandemic, the plan underlines ‘the importance of a robust and resilient food system that functions in all circumstances..’.  Through the EU Biodiversity Strategy for 2030 ‘Bringing nature back into our lives’ the Commission has pledged to transform at least 30% of Europe’s land and seas into effectively-managed protected areas.  One of the key commitments under the strategy is to introduce legally binding nature restoration targets in 2021, with the aim, by the end of the decade to have ‘significant areas of degraded and carbon-rich ecosystems restored’.

Oxford Farming Conference Cancelled

The organisers of the Oxford Farming Conference have decided to cancel the 2021 event, due to be held in early January next year.  Like many other gatherings, the OFC21 has fallen foul of the Covid-19 outbreak.  Although many months away, the organisers felt that they could not take the financial risk of booking venues with the threat that the conference could not go ahead.  There will be an online OFC instead on the 7th January 2021.

New UK Global Tariff Regime

The UK farming industry will continue to receive protection from cheaper global imports.  This is the result of the new tariff regime announced on the 19th May and represents somewhat of a U-turn from earlier Government policy.

The UK Government has announced its new Most-Favoured Nation (MFN) tariff regime, the UK Global Tariff (UKGT).  This sets the tariffs that have to be paid on imports entering the UK after the end of the Transition Period when it will replace the EU Common External Tariff (CET).  If there is no trade deal in place with the EU by the end of the Transition then these tariffs will also apply to imports from the EU as from  1st January 2021. 

The Government claims that the new tariff regime is tailored to the needs of the UK economy and that the UKGT will be simpler and easier to use in comparison with the EU CET.  Nearly 6,000 tariff lines have been streamlined or simplified, which is claims will reduce the administrative burden on business and ‘nuisance’ tariffs (under 2%) have been removed.

From an agri-food perspective, as the table below illustrates, most of the tariffs under the CET have been maintained at pretty much the same levels, but converted from Euro into Sterling.  In most cases, the currency conversion rate is €1 = £0.83, but there are some variations due to rounding and simplifications.  Effectively, the protection around the UK market will be kept at the same level as it was round the EU Single Market. 

Tariffs for products such as beef carcases continue to have both a percentage (12.0%)  and a fixed component (£147.00 per 100kg).  Whilst still complex on the face of it, this is a response to the needs of industry insofar that if a percentage-only tariff was applied, cheaper imports would have a lower tariff in monetary terms.  That said, meat tariffs are still largely expressed in terms of per 100kg, it would surely have been simpler from a business perspective to have expressed these in per tonne or per kg terms?

For cereals, the tariffs for wheat (changed from €95 per tonne to £79 per tonne) and barley (€93 to €77) remain largely the same and have only changed due to currency conversion.  Maize grain tariffs have been reduced to zero (from €10.40 per tonne).  This might provide extra competition to UK-produced feed grains, notably feed barley.   For wheat flour, the tariff has changed from €172 per tonne to £143.  The tariffs for maize, barley and oat flour have been reduced to zero but these are marginal products.  

Across fruit and vegetables, the main changes are simplifications and rounding.  For instance, the tariff for potatoes has reduced from 14.4% to 14.0%.  However, products such as oranges have seen somewhat more significant changes (e.g. tariff for fresh oranges reduced from 16% to 12%), thus making it cheaper for businesses to import such products which are not normally produced in the UK.

Another noteworthy point is that the UK plans to discontinue the EU’s Meursing table which creates thousands of tariff variations for products such as biscuits, pizzas, confectionary and spreads which complicates the calculation of tariffs for these products.

Commodity CodeDescriptionEU CET Duty RateUK GT Duty RateChange
02011000Fresh/chilled beef carcases 12.80% + 176.80 EUR / 100 kg12.00% + 147.00 GBP/100kgCurrency conversion
02031110Fresh/chilled pig carcases 53.60 EUR / 100 kg44.00 GBP/100kgCurrency conversion
02041000
Fresh/chilled lamb carcases 12.80% + 171.30 EUR / 100 kg12.00% + 143.00 GBP/100kgCurrency conversion
02071110
Fresh or chilled, plucked and gutted chickens26.20 EUR / 100 kg21.00 GBP/100kgCurrency conversion
04051011Butter189.60 EUR / 100 kg
158.00 GBP/100kg
Currency conversion
04069021
Cheddar cheese167.10 EUR / 100 kg
139.00 GBP/100kg
Currency conversion
07011000
Seed potatoes
4.5%4.0%Simplification
07101000
Potatoes14.4%14.0%Simplification
08051080
Fresh or dried oranges (excl. fresh sweet oranges)
16.00% (01 JAN-31 MAR, 16 OCT-31 DEC), 12.00% (01 APR-15 OCT)
12.0%Simplification
1001990050
Common wheat (low quality)95.00 EUR / tonne
79.00 GBP/1000kg
Currency conversion
10039000
Barley (excl. seed for sowing)
93.00 EUR / tonne
77.00 GBP/1000kg
Currency conversion
10059000
Maize10.40 EUR / tonne
0.0%Liberalisation
11010015
Wheat flour172.00 EUR / tonne
143.00 GBP/1000kg
Currency conversion
17011210
Raw beet sugar
33.90 EUR / 100 kg / std qual
28.00 GBP/100kg std qual
Currency conversion
17011310
Raw cane sugar 33.90 EUR / 100 kg / std qual
28.00 GBP/100kg std qual
Currency conversion
3102309000

Fertiliser (ammonium nitrate) in pellet form6.5%6.0%Simplification

Source: UK Government (Department for International Trade)

Further information is available via: https://www.gov.uk/guidance/uk-tariffs-from-1-january-2021

Overall, the UKGT schedule differs substantially from the substantial reductions previously proposed in March 2019.  On the face of it, this reduces the scope for the competitive pressure to be exerted on farmers, post-Transition.  Simultaneously, it will also serve to focus minds within the EU as the tariffs will be very prohibitive for EU farmers under a No Trade Deal scenario.  It shows that the UK Government is learning that announcing higher level tariffs can be used as an effective bargaining chip in trade negotiations, not just with the EU but other countries as well.

As with all matters pertaining to trade, the devil will be in the detail.  Its announcement did not cover Tariff Rate Quotas (TRQs) – these allow specified volumes of agricultural commodities to be imported either tariff-free or at much lower tariff levels.  This announcement is due to be made later in the year.  Any new TRQs that the UK introduces on a MFN basis will have the potential to cause significant competitive pressures.  For instance, if the UK Government decides to introduce new TRQs for beef similar to the 230,000 tonnes proposed in March 2019, substantial volumes would enter into the UK tariff-free.  As the chart below shows for beef, this would severely undermine the competitiveness of British farmers.  It is only when the UKGT (previously EU CET) is applied, that GB prices are competitive.  Meanwhile for Ireland, whilst its prices were slightly below GB when both countries were part of the EU, the application of the UKGT on its beef would render it uncompetitive in the UK market.

At least the UKGT schedule has given some clarity to businesses on the tariff levels to expect post-Transition, and potentially under a No-Trade Deal Brexit.  With the UK-EU trade negotiations still experiencing difficulties, some influential voices have recently called for a ‘Preparation, Ratification and Engagement Period’ (PREP) of 6-9 months from the end of June to permit the completion of trade negotiations by October and thereafter, to use this time to help business and regulatory authorities to prepare to implement the major legal changes which would ensue.  This call appears to be gaining traction amongst trade policy experts.  Such a period would certainly help, but it would remain a tall order to iron out all of the technical arrangements required to handle the future UK-EU relationship. 

Commons Passes Ag Bill

The Agriculture Bill passed its remaining stages in the House of Commons on 13th May. It made a small piece of legislative history as it was the first Bill to be voted on electronically (remotely). Apparently some MPs struggled with the technology as members of the Government (notably, the Chancellor Rishi Sunak) managed to vote against their own legislation.

In any event, there was a minor rebellion by some Conservative MPs as they attempted to get an amendment included in the legislation that would that would have guaranteed that imports of food would have to meet UK standards on animal welfare, the environment and food safety. It was tabled by Tiverton and Honiton MP Neil Parish, who is also chairman of the House of Commons Environment, Food and Rural Affairs Committee. The amendment was defeated by 328 votes to 277 and the Bill itself was finally passing by 360 votes to 211.

Ministers say the issue of protecting food standards in post-Brexit trade deals will be dealt with in the upcoming Trade Bill, and that the Agriculture Bill was not the correct place for it. However there is a fear that the Government doesn’t want anything written into legislation that will tie-its-hands when it comes to negotiating a deal and that cast-iron guarantees on standards may not be seen in the final Trade Bill.

The Agriculture Bill now passes to the House of Lords. The Lords is not yet set up for electronic voting (their Lordships may have even more problems with using the system . . . ). There will therefore be a delay before the Bill completes its legislative journey. The Lords may try to insert an amendment on food standards similar to that which failed in the Commons. It is still expected to receive Royal Assent in the summer.

UK Japan Trade Deal

Japan is one of the key target countries that the UK wants to do a post-Brexit trade deal with.  The Government has recently published its negotiating objectives for these talks, see – https://www.gov.uk/government/news/liz-truss-kick-starts-trade-negotiations-with-japan.  Japan is the third largest economy in the world (fourth if the EU is counted as one) and the 11th largest trading partner of the UK.  In terms of agri-food, any deal with Japan is likely to be far less important that those with the EU or US for example.  However, it is still worth watching for potential impacts.

Furlough Scheme Extended

The Chancellor, Rishi Sunak, announced on the 12th May that the Covid furlough scheme would be extended to the end of October.  The scheme, officially called the Coronavirus Job Retention Scheme, was originally due to finish at the end of June.  It will now continue on its present terms (80% of wages paid up to a maximum of £2,500 per month) until the end of July.  From the start of August the scheme will alter.  Details of the changes will be published by the end of the month, but the scheme will become more flexible – for example allowing employees to return to work on a part time basis.  It is also expected that employers will be expected to shoulder a larger proportion of the cost of the scheme.  At present, it is costing the Government around £10bn a month.

Farm Incomes Rise in 2019

TIFF Figures

The profit of UK farming recovered in 2019 after the drought-affected 2018 year.  The latest estimates for Total Income from Farming (TIFF) released by Defra show an increase of 6% in real terms, leaving profit for the industry at £5,278m for 2019.

TIFF is the total profit from all UK farming businesses for the calendar year.  It shows the return to all entrepreneurs for their management, labour and capital invested.  Readers with good memories may recall that, despite the latest figures being called the ‘first estimate’, a figure was published in December (see our article https://abcbooks.co.uk/farm-profits-up-for-2019/).  This was an initial forecast provided for the EU and at the time 2019 TIFF was forecast to rise 14% in real terms.  This always looked a little high to us – our estimate at the time was 6% which has turned out close to the mark.   

The main reason for the rise in profitability was an increase in arable output.  The overall sales of arable crops rose by 6%, with wheat leading the way with a 16% increase in output value.  This was largely a ‘bounce-back’ Overall livestock output was close to year-earlier levels, as were costs.  The chart below shows the historic TIFF figures, plus our forecast for the current 2020 year and 2021.

Whilst we are only partway through the 2020 year it seems highly likely that the lack of autumn plantings last year will affect output from harvest 2020.  There are also likely to be some Covid-19 effects such as reduced beef prices and dairy farm incomes affected for certain producers.  Whilst this will be offset by lower costs we forecast a decline in farm profitability for the year of 10%.  Towards the end of the year there may be market disruption as the Transition Period comes to an end – depending on whether a trade deal has been concluded with the EU or not.  Some of these trade effects may well linger into 2021 which is why there is a (tentative) forecast for another decline in TIFF. 

Further details on the aggregate agricultural accounts can be seen at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/883681/agricaccounts-tiffstatsnotice-07may20.pdf.  A further update to the statistics is due in November.

Productivity

Alongside the TIFF figures, Defra also published estimates of Total Factor Productivity (TFP) for 2019.  This measures how well inputs are converted into outputs and thus gives an indication of the efficiency and competitiveness of the farming industry.  It is one of the measures that Defra looks at closely, as it tries to improve the performance of UK agriculture. 

The figures for 2019 show a significant uptick with TFP increasing by 4% between 2018 and 2019.  This was largely caused by an increase in the volume of outputs (up by 3.8%) with a small decline in the amount of inputs used (-0.2%).

Although this is encouraging, any one year’s figures need to be viewed with some caution – the series tends to fluctuate on an annual basis, and it is the trend over a longer period that is more important.  UK agriculture shows an improvement in productivity, but the rate of increase is slow.  Since the figures began in 1973 the annual average increase is around 1%.  From 2000 to 2019 is has been at a lower level of 0.7% per year.  Getting TFP, and other productivity measures, moving upwards more strongly is one of the key policy goals of Government over the next few years.  For more details see –  https://www.gov.uk/government/statistics/total-factor-productivity-of-the-agricultural-industry